Sunday, October 30, 2016

It’s nonsense to claim that inflation is only going up 1 percent per year in the United States. The cost of living of a typical family is going up much more than that—insurance, transportation, schooling are all going up.

For example, health care premiums for insurance policies [are rising], so the typical household is being squeezed. The central banks don’t care about that; they don’t look at it.

I suppose the system will collapse before we become like Venezuela. In the West, if they start to print money, the end game will be brief. Within five years, I expect the system to implode.

You better ask the bureaucrats what their plans are. They had zero rates since December 2008; soon eight years [passed], and that hasn’t boosted economic activity for the average household, not in Japan nor the United States nor the EU. Now they talk about fiscal spending.

We already have large deficits but no deficit is large enough for the interventionist, so they will boost fiscal spending. They will finance deficits by issuing government debt, which the central banks will monetize. The Treasury will issue debt, and then the Fed will buy all these debts. Of course, that will not end well, but it will postpone the problem for a while.

Then they will find some academics who will blame wealth inequality on the evil capitalists who made so much money out of asset bubbles.

They will blame the economic woes on these people. To some extent this is true. But the rich people did not create the inflated asset values; it was the central banks, by slashing interest rates to zero and negative interest rates in many countries.

First, you create mispricings through artificially low rates and negative interest rates and you boost the income and wealth of the super-rich. It’s at best the 0.1 percent that really benefit from asset inflation, at the cost of all the people that have no assets and so you have this rising wealth inequality. So we have to tax the rich people and tax them more.

Taking money from the rich is appealing if you go to voters, and you say to them, “Look, the reason the economy is doing so badly, it’s because of the rich people, the billionaires. We have to take 20 percent away from them and give it to you.” You can be sure that everybody will vote for that because the wealthy are a minority. This is what happens after monetary policies completely fail.

Some well-connected people will hide their wealth but a lot of people won’t. Even if they take 50 percent from the richest, it’s not going to help. The next step will be to take money from less wealthy people; the interventionists will go all the way.

Thursday, October 27, 2016

They could essentially monetize everything, and then you have state ownership. And through the central banking system, you introduce socialism and communism, which is state ownership of production and consumption. You would have that, yes, that they can do.

The BoJ owns more than 50 percent of Japanese ETFs (exchange traded funds), which own large parts of the underlying companies. So indirectly they may own 20 percent of the Japanese companies, and they can go up to a higher level.

I don’t think the central bankers are intelligent and smart enough to understand the consequences of their monetary policies at present. They focus on inflation but in my view they shouldn’t do anything. They don’t focus enough on what it does to the average standard of living of the people, to the average household income.

The developed market central banks can go on for quite some time.If Zimbabwe prints money, the pain is more obvious right away because if you are Zimbabwe, and you print money and the others don’t, and the currency collapses, and you feel the pain much sooner.

If the major central banks, the Fed, the European Central Bank (ECB), the BoJ, the Bank of England, and the Chinese monetize and print money in concert and agreement with each other, they all talk to each other; then the currencies don’t collapse against each other. There may be fluctuations, but we don’t have a general collapse of a currency.

Paper money, in general, can then collapse, and it has to a large extent against asset prices like real estate around the world over the last 30 years, against equity prices, against bond prices—which have been rallying since 1981—and against precious metals since 1999.

Asset price inflation is less obvious to the average person in the street. The average American has no money, so he doesn’t care if prices for paintings and real estate go up—until it touches him.

Sunday, October 23, 2016

Central bankers trying to spur growth are like alchemists trying to make gold and they're just as likely to fail, said Marc Faber, the publisher of the Gloom, Boom & Doom report.

"When I think of central banks, I think of alchemists," Faber, also known as Dr. Doom for his pessimistic views, told CNBC's "Squawk Box" on Thursday.

"They were trying to mix all kinds of powders and chemicals to produce essentially gold. And they all failed," he said, although he noted that some alchemists did produce other useful chemicals during their ill-fated search for the precious metal.

"But the central banks are just mixing water, in other words, paper money, and the results cannot be a favourable outcome in the long run."

Faber noted that from the 1970s to the mid-1980s, people believed inflation was "forever," but now the same central banks that were fighting inflation were now fighting deflation. This fight was a mistake, he said, claiming that across Asia, price rises were exceeding income gains.

"It's possible that suddenly inflationary pressures will be there, that central banks should then act but they cannot because the system is so overleveraged," he said.

At the same time, Faber noted that the low and negative interest rates globally were hurting pension funds.

"Pension funds, even in these beautiful years of returns, 2009 to today, they have become less funded, they have become more underfunded," he said. "With interest rates at zero and this low, their portion that's in bonds is never going to meet the expected returns of 7.5 percent. It's physically not possible."

That potential outcome was part of Faber's thesis for one of his long-time favorite investment options: Gold.

Faber doesn't expect the major global central banks to raise interest rates above the rate of cost of living increases.

"They are going to continue to print money and the Fed's balance sheet and the other central banks' balance sheets will continue to grow until the whole system collapses and then you and I in gold assets will be better off than in paper assets," he said.

Thursday, October 6, 2016

Investment guru Marc Faber, famous for his dire predictions, thinks the Dow Jones Industrial Average could eventually soar to 100,000. Thursday, it closed near 18,240.

But in character with his “Dr. Doom” persona, the publisher of the Gloom Boom & Doom Report newsletter, it won’t be pretty.

“In an extreme money-printing environment, the Dow Jones Industrial Average can go to 100,000,” Faber said in a recent interview with the Epoch Times.

He has long been a critic of global central banks, alleging that policymakers are manipulating the markets.

“So the madness in the present time may go on. In a manipulated market, it won’t end well, but you don’t know when it will not end well, and how far the manipulation can last,” he said.

“They could essentially monetize everything, and then you have state ownership. And through the central banking system, you introduce socialism and communism, which is state ownership of production and consumption. I don’t think the central bankers are intelligent and smart enough to understand the consequences of their monetary policies at present,” he said.

“I suppose the system will collapse before we become like Venezuela. In the West, if they start to print money, the end game will be brief. Within five years, I expect the system to implode.”

In a recent interview on Fox Business anchor Neil Cavuto's show "Coast to Coast," the "Sharktank" reality TV personality warns: "In the event Donald wins, I have no doubt in my mind the market tanks."

Cuban explained that there "are so many external global influences" on the market. "You know, what money comes here when there is uncertainty overseas, what money goes into Treasurys, where does money go if rates go higher or lower?"

"Is there a recession around the corner? I don't see it," Yardeni, the president of independent firm Yardeni Research, told CNBC recently. Even as speculation abounds over the Federal Reserve's timing on tightening monetary policy, the market bull believes the trend is still up.

"The bottom line here is even if the Fed [hikes] in June, we are still talking about historically low interest rates," he told CNBC. "I do think that the dollar will continue to strengthen, and I do think some of the panic and concerns about the commodity markets were overdone at the beginning of the year."

Marc Faber breaks down why he thinks Hillary Clinton is the worst candidate running for president in US history. He believes she will be a disaster for the entire world and lead us into a global conflict. In addition to this, he breaks down the current state of the failing economy.

Monday, October 3, 2016

In this recent interview, Marc Faber breaks down the risks that the global markets currently face. He sees a crash coming in our future and highlights how the tight the supply of gold truly is. Are you prepared?

Sunday, October 2, 2016

Central bankers trying to spur growth are like alchemists trying to make gold and they're just as likely to fail, said Marc Faber, the publisher of the Gloom, Boom & Doom report.

"When I think of central banks, I think of alchemists," Faber, also known as Dr. Doom for his pessimistic views, told CNBC's "Squawk Box" on Thursday. "They were trying to mix all kinds of powders and chemicals to produce essentially gold. And they all failed," he said, although he noted that some alchemists did produce other useful chemicals during their ill-fated search for the precious metal. "But the central banks are just mixing water, in other words, paper money, and the results cannot be a favourable outcome in the long run."

Faber noted that from the 1970s to the mid-1980s, people believed inflation was "forever," but now the same central banks that were fighting inflation were now fighting deflation.

This fight was a mistake, he said, claiming that across Asia, price rises were exceeding income gains. "It's possible that suddenly inflationary pressures will be there, that central banks should then act but they cannot because the system is so overleveraged," he said.

At the same time, Faber noted that the low and negative interest rates globally were hurting pension funds. "Pension funds, even in these beautiful years of returns, 2009 to today, they have become less funded, they have become more underfunded," he said. "With interest rates at zero and this low, their portion that's in bonds is never going to meet the expected returns of 7.5 percent.